AA Parent Company's Profits Plummet

American Airlines passenger aircraft are seen at Lambert International Airport in St. Louis, Tuesday, Aug. 13, 2002. In the past year American has overhauled flight schedules at its hubs to use planes and employees more efficiently, reduced the number of different jets it flies to cut maintenance costs and tested a new fare structure to offer lower prices for business travelers _ each move a nod to the Southwest Ailines method.
The parent company of American Airlines, the air carrier mired in a dispute with unions over perks for top execs that were kept secret, suffered a staggering $1 billion loss in the first quarter of the year.

Meanwhile, the pilots union says that while it won't re-vote on a labor contract the company says it needs to survive, it might never sign the deal.

According to CBS MarketWatch, the company, AMR Inc., is blaming its losses on the war in Iraq and the SARS epidemic, which have lowered demand for air travel. The results were worse than expected by market analysts; CEO Don Carty called them "dreadful."

The Dallas Morning News reported that the board of American parent, AMR Corp., will likely discuss Carty's future during a previously scheduled directors' conference call on the airlines' earnings on Wednesday. The newspaper cited an unidentified source close to the board.

Board members are apparently dissatisfied with Carty because he failed to tell union leaders about executive perks before employees voted on the labor concessions last week.

American spokesman Bruce Hicks called the report speculation and said the company would have no comment.

Meanwhile, American Airlines pilots are threatening to join other unions in balking at wage and benefit cuts they already approved to keep the airline solvent.

Although the Allied Pilots Association said Tuesday it won't call for a new vote on the measure, a spokesman said union directors were considering telling their president, John Darrah, not to sign the ratification papers.

Two other unions, the Transport Workers Union and the Association of Professional Flight Attendants, have both called for another vote, increasing the possibility that the deal will be rejected.

A union source told the Fort Worth Star-Telegram in Wednesday's editions that leaders of American's three key unions were considering issuing a joint statement calling for Carty's resignation.

The unions reacted angrily when they learned after consenting to the concessions that American had approved bonuses and pension payments — executive perks that would be protected in bankruptcy — but asked rank-and-file workers to take deep pay cuts.

Carty has apologized several times for not telling workers sooner about the perks. The company has canceled the bonuses but not the $41 million in pension funding.

Two of American Airline's union groups said they plan to hold a new vote on the wage cuts. But the pilots' union said Tuesday they saw to need to revisit its voting.

However, the pilots' union could still derail the concessions by refusing to certify the union's approval of wage and benefit cuts American has said it needs to avoid bankruptcy.

"The question has been whether we were going to have a revote, and our board has determined there is no need for one because it's in our bylaws and also explicit in the agreement itself that it does not take effect until our president signs it," said Andy Sizemore, a spokesman for the Allied Pilots Association.

Sizemore said the decision on whether Darrah would sign the agreement depends on what is "in the best interests of our pilots and American Airlines."

Also Tuesday, APFA spokesman George Price said their new vote will involve a 30-day paper ballot. He said details on when the revote would begin were being worked out.

The Transport Workers Union, which represents ground workers, also planned to conduct new balloting under customary 30-day voting procedures on its share of the cost cuts. Both unions barely approved the concessions deals last week.